Upload
others
View
3
Download
0
Embed Size (px)
Citation preview
11 November 2019 | ESMA70-151-2650
Final Report Technical advice on ESMA fees for Third-Country CCPs under EMIR 2.2
ESMA • CS 60747 – 103 rue de Grenelle • 75345 Paris Cedex 07 • France • Tel. +33 (0) 1 58 36 43 21 • www.esma.europa.eu
2
11 November 2019
ESMA70-151-2650
3
Table of Contents
Executive Summary .............................................................................................................. 4
1 Background .................................................................................................................... 6
2 General aspects of the feedback to the fees proposals .................................................. 7
3 ESMA’s budgeting model and management of EC advancement ................................... 9
4 ESMA’s activities and estimated costs under EMIR 2.2 .................................................11
5 Other authorities’ CCP supervisory fees ........................................................................16
6 Assessment of specific feedback and final proposals ....................................................18
6.1 Initial recognition fees under EMIR 2.2. for TC-CCPs (i) that are not yet recognised
or (ii) that change tier ........................................................................................................18
6.2 Fees in 2019 for recognised or applicant TC-CCPs ................................................20
6.3 Fees in 2020 and until end of transition period for recognised or applicant TC-CCPs
in 2020 ..............................................................................................................................21
6.4 Comparable compliance .........................................................................................22
6.5 First-year fee following initial recognition ................................................................24
6.6 Annual fees ............................................................................................................25
6.6.1 Introduction .....................................................................................................25
6.6.2 Annual fees for Tier 1 TC CCPs ......................................................................26
6.6.3 Annual fees for Tier 2 TC-CCPs ......................................................................27
6.7 Fees for withdrawal of TC-CCP recognition ............................................................28
6.8 Payment and reimbursement conditions under EMIR 2.2. ......................................29
6.8.1 Fees for initial recognition and for application of comparable compliance ........29
6.8.2 No reimbursement of fees in case of withdrawal of application by a TC-CCP
before ESMA’s recognition ............................................................................................31
6.8.3 Annual fees .....................................................................................................31
6.8.4 Withdrawal of recognition ................................................................................32
6.8.5 2019 and 2020 TC-CCP fees ..........................................................................32
7 Annex ............................................................................................................................33
7.1 Annex I ...................................................................................................................33
4
Executive Summary
Reasons for publication
On 13 March 2019, the European Parliament, the Council and the Commission reached a
political agreement on the review of the regulatory framework for the authorisation and
supervision of CCPs established in Title III of Regulation 648/2012 (EMIR 2.2). While the
legislative process for the adoption of the proposed regulation amending EMIR in this respect
was in the final stages, ESMA initiated its preparatory work for the implementation of the new
regime for third-country CCPs (TC-CCPs).
Under the new regime the Commission (EC) has to adopt a delegated act on the fees to be
charged to TC-CCPs. ESMA received a provisional mandate on 3 May 2019 to provide
technical advice for the development of the corresponding Delegated Act, on the basis of
which ESMA ran a consultation, and on 30 October 2019 the mandate was confirmed (see
Annex).
This final report presents ESMA’s technical advice to the EC on the fees to be charged to
TC-CCPs in relation to the competences defined under EMIR as amended by EMIR 2.2. and
following the assessment of feedback to the proposals included in the consultation paper.
Contents
This final report is comprised of six major sections and an annex. Section 1 includes the
background and the agreed text of EMIR 2.2. with regards to fees to TC-CCPs. Section 2
summarises succinctly the feedback received to the consultation paper and responds to the
more general points raised by respondents. Section 3 includes the ESMA’s applicable
budgeting approach and the way ESMA’s budget is determined. Section 4 provide
information on the main activities that ESMA will need to carry out and the relevant high-level
costs in terms of FTEs for the supervision of TC-CCPs.
To facilitate benchmarking of the ESMA’s proposals to the EC Section 5 includes information
on the fees charged by EU and TC authorities for the authorisation/registration, recognition
and supervision of CCPs. Sections 6 includes the assessment of the feedback received on
the specific proposals that were consulted and each of the eight subsections contains the
way forward following the assessment of the feedback. The first subsection includes the
change in the fee for initial recognition of TC-CCPs to specify that each TC-CCP would pay
a first fee to process its application and in case it is determined to be Tier 2, an additional
one. Subsections 2 and 3 specify the approach for 2019 and 2020 fees, respectively.
Subsection 4 details how comparable compliance will be reflected in the fees and the discount
to the initial recognition fee if the TC-CCP applies for comparable compliance before it is
recognised. Subsection 5 outlines the approach for the first-year fee. Subsection 6 sets out
the framework for the calculation of annual fees and their dependence on other fees charged
by ESMA in the context of EMIR 2.2. Subsection 7 presents the removal of the proposed fee
5
in the case of full withdrawal of recognition of a TC-CCP. Subsection 8 provides the conditions
for payment and reimbursement of fees. Annex I contains the mandate received from the
European Commission.
Next Steps
ESMA will publish the final report and will submit its advice to the European Commission.
6
1 Background
1. On 13 June 2017, the European Commission (EC) published a proposal for the
amendment of EMIR and the ESMA Regulation (EMIR 2.2 proposal). The objective of
the proposal was that “the EU equips its Capital Markets Union with a more effective and
consistent supervisory system for CCPs, in the interest of further market integration,
financial stability and a level playing field.”
2. On 13 March 2019, the European Parliament, the Council and the Commission reached
a political agreement on the review of the regulatory framework for the authorisation and
supervision of CCPs established in Title III of Regulation 648/2012 (EMIR2.2 1 ,
hereinafter). While the legislative process for the adoption of the proposed regulation
amending EMIR in this respect is being finalised, ESMA has initiated its preparatory work
for the implementation of the new regime for third-country CCPs (TC-CCPs).
3. Given the growing importance of CCPs in the financial system and the global increase
in clearing and concentration of risks in a limited number of global CCPs, the framework
for recognition and supervision of TC-CCPs has been enhanced with the introduction of
EMIR2.2. In particular, a two-tier system for TC-CCPs based on their systemic
importance has been introduced. Where a TC-CCP is determined systemically important
or likely to become systemically important for the financial stability of the Union or of one
or more of its Member States, such TC-CCP will be considered a Tier 2 third-country
CCP (Tier 2 TC-CCP) by ESMA in accordance with Article 25(2a) of EMIR2.2. A TC-
CCP that has not been determined as systemically important or likely to become
systematically important for the Union or for one or more of the Member States is referred
to in this document as a Tier 1 third-country CCP (Tier 1 TC-CCP).
4. In particular, the amendments establish within the EU exclusive supervisory
competences for ESMA for Tier 2 TC-CCPs. In accordance with recital (45) of EMIR 2.2,
in order to enable ESMA to conduct its tasks with regards to TC-CCPs effectively, TC-
CCPs should pay fees for ESMA's supervisory and administrative tasks. In this regard,
paragraphs 1 and 2 of Article 25d provides that
“1. ESMA shall charge the following fees to CCPs established in a third country in
accordance with this Regulation and in accordance with the delegated act adopted
pursuant to paragraph 3:
(a) fees associated with applications for recognition pursuant to Article 25;
(b) annual fees associated with ESMA's tasks in accordance with this Regulation in
relation to the CCPs recognised in accordance with Article 25.
1 1 Regulation (EU) 2019/… of the European Parliament and of the Council amending Regulation (EU) No 648/2012 as regards the procedures and authorities involved for the authorisation of CCPs and requirements for the recognition of third-country CCPs, which was adopted by the European Parliament and the Council on 15 October 2019 and the final act was signed into law on 23 October 2019 – see https://data.consilium.europa.eu/doc/document/PE-88-2019-REV-1/en/pdf. It is soon to be published in the EU Official Journal.
7
2. The fees referred to in paragraph 1 shall be proportionate to the turnover of the CCP
concerned and shall cover all costs incurred by ESMA for the recognition and to the
performance of its tasks in accordance with this Regulation.”
5. Furthermore, paragraph 3 of Article 25d provides that:
“3. The Commission shall adopt a delegated act in accordance with Article 82 in order
to further specify the following:
(a) the types of fees;
(b) the matters for which fees are due;
(c) the amount of the fees;
(d) the manner in which fees are to be paid by the following:
(i) a CCP which applies for recognition;
(ii) a recognised CCP classified as a Tier 1 CCP in accordance with Article 25(2);
(iii) a recognised CCP classified as a Tier 2 CCP in accordance with Article
25(2b).
6. ESMA was mandated by the Commission to provide technical advice on the possible
content of this delegated act which is enclosed in Annex I in this paper.
7. Considering the adopted framework for the supervision of TC-CCPs and along with the
assessment of the feedback to each specific question and topic, this final report sets out
ESMA’s technical advice to the EC with regards to the fees related to the ESMA’s work
for the recognition and supervision of TC-CCPs under EMIR 2.2.
8. It is worth noting that ESMA has been in charge of the recognition of TC-CCPs since the
entry into force of EMIR. However, tasks related to TC-CCPs were supported by the
regular ESMA budget and not by specific fees charged to the TC-CCPs.
2 General aspects of the feedback to the fees proposals
9. ESMA received a total of 14 responses to the consultation paper, 5 of which were marked
as confidential by their submitters.
10. Some of the respondents have criticised the actual principle of collecting fees from
supervised entities. While in some jurisdictions, the funding of public agencies and
specifically the supervision of financial market participants follows a model of indirect
appropriations of a government budget, usually in the European Union the activities of
the supervisors of the financial markets are financed directly by the supervised entities.
This way, the burden to taxpayers not using these services is avoided, and only the
providers and the users of these services are taxed. These respondents did not provide
8
any practical arguments on the actual fee proposals; hence their feedback is limited to
this general comment. Moreover, as mentioned in the previous section, the EMIR 2.2
includes a specific empowerment for the European Commission to define applicable fees
for TC-CCPs. Therefore, there is a robust legal basis supporting the proposed fee model.
In practical terms, it is worth mentioning that EMIR 2.2. is not the first legal framework to
establish fees payable to ESMA from third country entities. At this stage, certified TC-
CRAs are paying annual supervisory fees to ESMA and when there are recognised TC-
TRs those would also need to pay annual supervisory fees.
11. Another general aspect that was mentioned relates to the level of fees and the need to
align them (and respectively the number of staff) to those charged to third country entities
by supervisors from other jurisdictions or those charged by EU NCAs to EU CCPs. For
the purpose of transparency, ESMA has included in the relevant sections information
that was found from the webpages of the authorities. While ESMA understands that from
TC-CCPs’ perspective such comparison seems understandable, ESMA also notes that
neither the regulatory and supervisory framework of those jurisdictions, nor the costing
model of the supervisory agencies, or the relevant marketplace are the same as the EU.
Therefore, there should be careful analysis of those comparisons to avoid drawing flawed
conclusions.
12. Moreover, some respondents adduced the existence of a potential conflict of interest
whereby ESMA might condition the outcomes of its tiering process for TC-CCPs on its
staff needs and perceived regulatory expansion. The process however is the inverse. As
explained in Sections 2 and 3 of the consultation paper, ESMA determines on an annual
basis its budget needs (incl. staff, systems, premises) depending on the expected level
of activity, in that case the number of TC-CCPs that are deemed to be either Tier 1 or
Tier 2. As EMIR 2.2. establishes a significantly more intensive and extensive supervision
of Tier 2 TC-CCPs compared with Tier 1 TC-CCPs, ESMA will take this into account
when planning its resources for the forthcoming budgetary year. Moreover, the fact that
the ESMA’s budget is audited on a yearly basis by the European Court of Auditors will
act as a control mechanism against any potential conflicts. In this respect it is worth
noting that ESMA will not finance its growth by changing TC-CCPs. It will only charge
them fees for the activity directly related to the supervision of TC-CCPs, which will require
additional resources to be planned according to the budget principles explained in
section 3.
13. A related general point relates to the simplification and heightening the transparency of
the fee determination process. Firstly, as explained in paragraph 25 of the following
section ESMA aspires to establish a very simplified process on the determination of fees.
Secondly, ESMA wants to rule out any concern regarding the transparency of
determination of its supervisory budget. ESMA is a public authority and as such its
budget is subject to the highest levels of scrutiny. Moreover, ESMA does not have among
its stated objectives the maximisation of fees received from supervised entities nor the
expansion of its staff. As indicated in paragraphs 22 and 23, the approval of the budget
follows a preestablished procedure following the EU financial regulation and then the
correct implementation of the revenue budget is checked on a yearly basis by the
European Court of Auditors.
9
14. As a related matter the need for the predictability of fees was brought to ESMA’s attention
by the CP respondents. This aspect is indeed addressed by (i) ESMA’s proposal to
charge fees in advance of the supervisory year and (ii) the publication of the supervisory
budget by the end of September of the year previous to the supervisory year. This
15. The notion of proportionality has also been raised by respondents. It was tackled from
the two perspectives – general proportionality of fees and proportionality of fees in
comparison with the home supervisor fees. The general proportionality of fees is also
enshrined in the legal empowerment under EMIR 2.2. and as such ESMA is satisfying it
through the establishment of specific one-off recognition fees for Tier 1 and for Tier 2
TC-CCPs and distinct annual fees for recognised Tier 1 and Tier 2 TC-CCPs. It is
considered that distinguishing supervisory fees across Tier 2 TC-CCPs will not make the
proposal more proportionate, as explained in section 6.6.3. This is linked to the level of
systemic importance in the EU, the difficulty in establishing an efficient way to measure
the turnover (revenues are not the only measure and the activity metrics are usually
error-prone) and the similarity in supervisory effort towards the Tier 2 TC-CCPs. The
proportionality with the home supervisor fees is addressed in paragraph 11 and section
5.
16. Another general point made by the respondents related to the purpose of seeking
recognition – (i) either offer clearing services to EU clearing members or (ii) obtain
beneficial treatment under CRR. While ESMA coincides that these could be reasons to
seeking recognition, ESMA understands that in either case there will be a level of
supervisory cost that will be incurred through the supervision by ESMA of the TC-CCP.
This cost is linked to the systemic nature of the TC-CCP for the EU not to the reason for
which that TC-CCP applied.
17. Finally, respondents also acknowledged the comprehensiveness of the fee schedule
proposal, while requiring further recalibration and lowering of the fees. The last aspect
has been considered and ESMA has included several changes in this regard – (i)
reduction in the total initial recognition fee when combined with request for comparable
compliance; (ii) inclusion of two levels of discounts to annual fees when comparable
compliance is applied and (iii) removal of withdrawal of recognition fees.
3 ESMA’s budgeting model and management of EC
advancement
18. In order to enable ESMA to conduct its tasks related to TC-CCPs effectively as well as
to ensure an efficient use of ESMA’s budget, it is necessary that TC-CCPs, private sector
entities with a profitmaking objective, cover all costs of doing business, including the
costs related to ESMA’s recognition and supervision of TC-CCPs.
19. ESMA applies a universal budgeting approach, which means that income from fees is
treated as general revenue. This is in line with the standard practice of other partially
funded EU agencies, as recommended by DG Budget of the EC.
10
20. ESMA prepares its annual budget aiming at balancing income through fees with the
incurred expenditure, understanding that deficits or surpluses are to be balanced by the
rest of ESMA’s income sources. The total amount of ESMA’s annual revenues is defined
based on ESMA’s Activity-Based Management methodology. ESMA assesses on an
annual basis its budget, which comprises not only the number of staff members needed
to perform a given task, but also the related logistics, IT, communications and general
costs. This structure is developed consistently with the ESMA fee regulations for TRs2
and CRAs3.
21. In case of deficits (ESMA collecting less than incurred), ESMA does not recover the
deficit from the supervised entities. If the deficit is repeated or significant, ESMA should
analyse the reasons why it happened, drawing up lessons for the next budgeting period.
For surpluses (ESMA collecting more than incurred) the same reasoning should be
followed. Hence, no excess of fees is paid back to the supervised entities. This
mechanism is already in place at ESMA for credit rating agencies (CRAs) and also for
trade repositories (TRs) under EMIR4 (ESMA fee regulations). In this regard it is worth
noting that given the annual character of the budget, ESMA will, at all times, be in
possession of the relevant information to ensure alignment between the costs incurred
and the fees to be paid by supervised entities. Moreover, some of the supervisory
activities are horizontal, i.e. they cover all the supervised entities and in at case it is very
difficult to allocate specific costs to one entity, except if drivers for allocation of indirect
costs are used.
22. The existing mechanisms in place (EU budgetary procedure, annual reporting, single
programming document), and the required approval by the ESMA’s Management Board
and Board of Supervisors, facilitate the transparency of the budgeting process and
ensure an appropriate level of internal controls. Moreover, ESMA has implemented an
activity-based budgeting and an activity-based costing models in order not only to plan
its budget, but also to accurately calculate and control the cost of each of its activities.
23. Furthermore, on a yearly basis, the correct implementation of ESMA’s budget, and in
particular of the fee-funded budget, versus the EU Financial Regulation, is audited by
the European Court of Auditors. The final audit report is communicated to the European
Parliament and Council, as part of the European Parliament’s discharge of ESMA’s
annual accounts.
24. In terms of predictability, the total amount of the estimated costs is presented together
with the ESMA’s annual work programme in September of the year N-1, and the
approved budget is published on ESMA’s website and in the Official Journal of the EU in
the beginning of the year N.
25. In addition, ESMA has been requested by the Internal Audit Service of the EC to further
simplify and harmonise, to the extent feasible, its fee models. Therefore, in this final
2 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2013:279:0004:0009:EN:PDF 3 https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:090:0006:0010:EN:PDF 4 In the case of TRs it is also proposed to follow the same model under SFTR and under Securitisation Regulation.
11
technical advice, ESMA is putting together fee proposals that are in line with this general
objective.
26. Furthermore, ESMA aims also at collecting fees by the start of a calendar year to ensure
the availability of resources for its activities. The reason for this is that, at this stage,
ESMA is not allowed to keep reserves from revenues from previous years. The
determination of fees needs to be based on the latest available information. More
detailed information on the payment and reimbursement conditions is specified in section
6.8.
27. Finally, to facilitate the set-up of ESMA’s new tasks with regards to TC-CCPs, the EC
has foreseen an advancement of ESMA’s fee revenues for 2019 (€1,045,000) and 2020
(€5,346,000) representing maximum amounts available in order to cover ESMA’s overall
cost for TC-CCP for these two years (including preparatory work). As a result, any
amount advanced by the EC to cover ESMA’s yearly costs in relation to TC-CCPs and
that is not covered by corresponding fees for that period will need to be recovered in the
years 2022 and 2023. These costs will be distributed across the years in which they need
to be returned to the EC. This is a one-off situation and constitutes a deviation from the
general framework under which ESMA’s fees, revenues, and costs operate.
ESMA establishes a harmonised framework for dealing with surpluses and deficits and for
treating the annual fees under both EMIR 2.2 as general revenue as follows:
a. In case of deficits (ESMA collects less than incurred), ESMA does not recover
the deficit from TC-CCPs.
b. In case of surpluses (ESMA collects more than incurred), ESMA does not pay
back the surplus to TC-CCPs.
c. Fees are to be paid by the end of the previous calendar year to the one for which
fees are due to ensure availability of resources for the performance of ESMA’s
tasks.
By way of derogation to the previous paragraph, in relation to the period 2019-2020 for
which an advancement from the European Commission will be given to ESMA, ESMA will
balance any surplus or deficit in TC-CCP budget with the 2021-2023 TC-CCP budgets.
ESMA will allocate the relevant costs proportionately to Tier 1 and Tier 2 TC-CCPs.
4 ESMA’s activities and estimated costs under EMIR 2.2
28. In the revised Legislative Financial Statement accompanying EMIR 2.2, the EC has
included an extensive assessment of the objectives, tasks and resources needed by
ESMA under EMIR 2.2. Based on this assessment, the fees to be paid by TC-CCP
should cover the costs of up to 49 full-time equivalent staff members (FTEs), carrying
out the tasks under the Regulation, including the necessary horizontal functions, and the
three independent members of the Supervisory Committee in the steady state of
implementation of EMIR 2.2. Under this assumption, the TC-CCP maximum budget in
the steady state is around 8-9 million EUR, including, among others, initial recognition,
12
application of comparable compliance and supervision of TC-CCPs. This figure is in line
with the 2019 ESMA supervisory budget for CRAs. However, at this stage it is not
possible to forecast if and when this steady state will be reached, as this will depend on
the number of Tier 2 CCPs and of TC-CCPs in total and on the effective cost of the
supervisory activity carried out on TC-CCPs.
29. Once the delegated act under Article 25(2a) of EMIR become applicable, ESMA will be
empowered to perform a tiering of the TC-CCPs, in order for them to be classified as Tier
1 TC-CCPs or Tier 2 TC-CCPs. To carry out the tiering of TC-CCPs, ESMA will need to
collect, process and assess an important amount of information needed to classify the
entities as either Tier 1 or Tier 2 in the recognition process laid down in EMIR 2.2. These
costs will be covered by either a one-off initial recognition fee for new applicants, the
relevant 2019 and 2020 fees, the fees payable by TC-CCPs whose currently suspended
applications are unsuspended or entities that become Tier 2 TC-CCPs, or by the annual
fees applicable both to Tier 1 and Tier 2 TC-CCP.
30. Some of the ESMA activities will be one-off activities and will take place in the early years
of the entry into force of EMIR 2.2. The tiering for TC-CCPs already recognised under
the current EMIR should be completed within 18 months after the entry into force of the
delegated act on tiering according to Article 89(3c). The rest will be completed on an
ongoing basis in accordance with a frequency indicated in EMIR 2.2.
31. The detail and amount of information to be handled for recognition and on-going tasks
with respect to TC-CCPs will be different, thus different levels of fees linked to the
respective activities are established.
32. Although Tier 1 TC-CCPs may not be considered as systemically important, under EMIR
2.2 at the time of tiering, ESMA is required to review regularly their systemic importance.
Therefore, even if an entity would not qualify as Tier 2 TC-CCP, there will be costs
attached to the tasks to be performed under EMIR 2.2 and the periodic assessment of
systemic relevance.
33. To sum up, activities with regards to the TC-CCPs include, among others, the following
tasks:
a. ongoing supervision of Tier 2 TC-CCPs, consisting of but not limited to: monitoring
of the ongoing compliance with EMIR requirements, through requests for information,
investigations and on-site inspection, day-to-day contact (physical meetings,
conference calls, etc) with CCP management, compliance, legal, IT, risk
management, financial, business and operations teams; assessment of risk models,
CCP rulebook and procedures, board and executive staff appointments, outsourced
services, extension of activities and services, IT solutions, capital adequacy, CCP's
shareholders / shareholding structure, and interoperability arrangements; review of
internal audits; comprehensive risk assessment; issuance of recommendations and
crisis management; risk analysis and modelling; legal analysis and support; bilateral
and multilateral meetings with stakeholders, in particular TC-CCPs and trading
venues as well as with other regulators or supervisors, therefore requiring frequent
travels;
13
b. assessment of comparable compliance of Tier 2 TC- CCPs;
c. performance of stress tests for Tier 2 TC-CCPs;
d. establishment and management of a TC-CCP college;
e. adequate information exchange between the ESMA Supervisory Committee and the
TC-CCP College;
f. effective cooperation with central banks of issue and the ESRB on relevant matters:
and
g. performance of impact assessment underlying a potential recommendation to deny
recognition to a third-country CCP.
34. Further to these activities, ESMA will also need to update the MoU with the relevant third-
country competent authority(ies) and monitor the regulatory and supervisory
developments in third countries for which equivalence decisions have been adopted by
the EC.
35. Finally, when ESMA carries out its tasks, support staff in the horizontal departments of
ESMA, such as legal, resources management and cooperation is needed. While these
areas are not directly involved in the supervision, they perform essential activities for the
efficient and effective functioning of the organisation, an increase in their number is
needed to better undertake the required new tasks. These resources are therefore
considered when defining the annual budget.
36. In terms of costs per supervisory and administrative activities that ESMA will need to
perform vis-à-vis TC-CCPs, and leaving aside the IT systems to support the supervision,
the following ones are included in EMIR as amended by EMIR 2.2:
Activities related to Tier 1 TC-CCPs Type of activity
Estimated number of FTEs/TC-CCP
Receipt of applications for recognition and assessment of
available information for tiering*
(i) Review of recognition decisions adopted prior to EMIR
2.2’s entry into force, including tiering, in accordance
with Article 89(3c);
One-off 0,05 FTE
(ii) where a TC-CCP intends to extend or reduce the
range of its activities and services in the Union;
One -off 0,05 FTE
(iii) in any case at least every five years, in accordance
with Article 25(5);
Periodic 0,05 FTE
14
Activities related to Tier 1 TC-CCPs Type of activity
Estimated number of FTEs/TC-CCP
Performance of tiering and determination of applicable tier in
accordance with Article 25(2a)*5
Periodic 0,15 FTE
Recognition* of Tier 1 TC-CCP under EMIR 2.2 in accordance
with paragraph (2) of Article 25;
Periodic 0,05 FTE
Annual on-going and regular assessment of compliance with
EMIR by Tier 1 TC-CCPs;
On-going 0,1 FTE
Activities related to Tier 2 TC-CCPs Type of activity
Estimated number of FTEs/TC-CCP
Receipt of applications for recognition and assessment of available
information for tiering*
(i) Review of recognition decisions adopted prior to EMIR
2.2’s entry into force, including tiering, in accordance
with Article 89(3c);
One-off 0,05 FTE
(ii) where a TC-CCP intends to extend or reduce the range
of its activities and services in the Union;
One -off 0,05 FTE
(iii) in any case at least every five years, in accordance with
Article 25(5);
Periodic 0,05 FTE
Performance of tiering and determination of applicable tier in
accordance with Article 25(2a)*6
Periodic 0,15 FTE
Request of additional information* to Tier 2 TC-CCPs to assess
completeness and compliance
Periodic 1,5 FTE
Request of additional information* to Tier 2 TC-CCPs to assess
completeness and compliance (comparable compliance included)
Periodic 0,5 FTE
5 *It refers to either initial recognition or a review of recognition. 6 *It refers to either initial recognition or a review of recognition.
15
Activities related to Tier 2 TC-CCPs Type of activity
Estimated number of FTEs/TC-CCP
Recognition* of Tier 2 TC-CCP under EMIR 2.2 in accordance with
paragraphs (2), and (2b) and (2c) of Article 25;
Periodic 0,5 FTE
Annual on-going and regular assessment of compliance with EMIR
by Tier 2 TC-CCPs, including the conditions for recognition for Tier
2 TC-CCPs in accordance with Article 25b;
On-going 0,1 FTE
Ongoing supervision of recognised Tier 2 TC-CCPs, including on-
site inspections to Tier 2 TC-CCPs, including assessment of partial
or full withdrawal of recognition;
On-going 3-47 FTE
Activities related to all TC-CCPs Type of activity
Estimated number of FTEs/TC-CCP
Conclusion and maintenance of cooperation arrangements with
third-country authorities in accordance with Article 25(7) and
monitoring of the regulatory and supervisory developments in third
countries in accordance with Article 25(6b);
One-off 0,125 FTE
Information exchange with third-country authorities in accordance
with Article 25(7)
On-going 0,25 FTE
37. The FTE figures for Tier 1 TC-CCPs are comparable with the figures on TC-CCP
included in the Report on staffing and resources8.
38. The proposed amounts of fees in the subsequent sections therefore cover the cost
estimates related to (i) average FTE cost including support staff (e.g. staff in support
areas such as legal, resources, corporate affairs), (ii) allocation of the appropriate costs
of the independent members of the Supervisory Committee, as well as (iii) impact of the
associated costs for these staff relating to the extra office space, IT systems/applications,
missions, training and others. The average FTE cost comprises the salary, pension
contributions, staff management and recruitment costs, building rent and maintenance,
facility management services, IT systems/applications/equipment, legal advice,
7 The actual figure will depend on the application of comparable compliance 8https://www.esma.europa.eu/sites/default/files/library/2015/11/2012-874.pdf, paragraph 32.
16
missions, translations and training, among others, indispensable for the performance of
the duties of the relevant staff member.
39. As an example, a fee of 400,000 EUR (additional Tier 2 fee and comparable compliance)
would comprise (i) the overall cost of 2 FTEs and (ii) the associated costs mentioned
above (IT investments included). 2 FTE is equal to either two staff members working for
one year or six staff members working for four months.
5 Other authorities’ CCP supervisory fees
40. To provide greater level of transparency and to ensure the appropriate benchmarking
with other authorities, ESMA includes in this final report a summary of the applicable fees
in other EU Member States for the EU-CCPs9, as well as the fees charged by certain
third country authorities to the local or third country CCPs operating in that jurisdiction.
The table is compiled based on available public information. The figures are EUR
equivalent.
41. As already indicated in paragraph 11, the analysis of these figures is not straightforward
and requires a deeper assessment of the supervisory framework, the industry landscape
and the authority’s funding principles.
42. Below ESMA has included a comprehensive table with the amount that have been
published by the relevant EU and TC supervisory authorities.
Authority Type of entity Authorisation Recognition Supervision
Specific administrative acts
Third-country authorities
Ontario Securities
Commission CCP 6,843-74,745 -
6,795 - 197,095 depending on
activities Yes
Ontario Securities
Commission
TC-CCP
- 6,843-74,745 6,795 - 197,095 depending on
activities Yes
Hong Kong Securities and
Futures Commission
CCP 1,147 - 1,147 Yes
Hong Kong Securities and
Futures Commission
TC-CCP
- 1,147
Australian Securities and
CCP around 2,500 depending on
complexity -
16,253 - 271,300 depending on the
Yes
9 The supervision of TC-CCPs in the EU is assigned to ESMA
17
Authority Type of entity Authorisation Recognition Supervision
Specific administrative acts
Investments Commission
tier of the applicant
FINMA (Swiss) CCP 0 -
92,014 - 230,036 depending on CCP category plus a variable fee based on gross income
Yes
FINMA (Swiss) TC
CCP - 0
92,014 - 230,036 depending on CCP category plus a variable fee based on gross income
Yes
Monetary Authority of Singapore
CCP 2,480 -
155,000 - 465,000 based on the cleared
amounts
No
Monetary Authority of Singapore
TC CCP
- 6,200
155,000 - 465,000 based on the cleared
amounts
CFTC CCP-TC
CCP 0 0 0 No
EU authorities
Consob CCP 0 - 525,070 No
DNB CCP - 0 0,2% RW assets No
BaFIN CCP 39,000 - from 50% to 100% of the
authorisation fee No
CNMV CCP 20,482 - 25,502 - 71,407 Yes
Bank of England
CCP
5,503 - 330123
depending on tier
- 1,243,778-2,179,200
depending on tier No
AMF/ACPR CCP 0 - 450,000 plus a
0.66% additional contribution tax
No
FMA CCP 0 - 100,000 No
18
Authority Type of entity Authorisation Recognition Supervision
Specific administrative acts
HCMC CCP 150,000 -
75,000 for annual renewal plus a
biennial contribution of
7.5% of revenues
YES
KNF CCP 4,500 -
5,5% of revenues. In
2018 it was EUR 371,579.29
YES
FI CCP
6,300 - 820,000 based on categories
- EUR 9,450 -
820,000 YES
Note: All amounts are in EUR. Where no specific amount is included in the relevant fee regulation, for illustrative and comparative purposes it is calculated by ESMA. In the case of TC authorities, ESMA did not find any special reference that the supervisory fees are due only by the local CCPs.
6 Assessment of specific feedback and final proposals
6.1 Initial recognition fees under EMIR 2.2. for TC-CCPs (i) that are
not yet recognised or (ii) that change tier
43. As indicated in the CP, the initial recognition of TC-CCPs under EMIR 2.2. implies that
certain activities are performed by ESMA. The MoUs with the relevant TC authorities
may need to be updated and ESMA will need to collect, process and assess data from
the TC-CCPs regarding their organisation, services and activities in order to perform the
tiering of the TC-CCP, i.e. such TC-CCP is considered either as Tier 1 TC-CCP or as
Tier 2 TC-CCP depending on if such TC-CCP is, or likely to become, systemically
important.
44. The indicators to be used by ESMA in determining whether a TC-CCP is or is likely to be
systemically important will be included in the delegated act adopted by EC under the last
paragraph of Article 25(2a) of EMIR as amended by EMIR 2.2.
45. In the CP was further explained that ESMA shall, after conducting the assessment
referred to in the first subparagraph of Article 25(2a) of EMIR as amended by EMIR 2.2,
inform the applicant CCP whether it is considered a Tier 1 CCP or not within 30 working
days of the determination that that CCP's application is complete, hence ESMA would
proceed with the recognition of the CCPs, only when it has at its disposal complete
information in view of the type of TC-CCP and has completed the process for tiering.
Subsequently, once a TC-CCP is determined not to be a Tier 1 TC-CCP, ESMA will
19
request additional information in order to assess the TC-CCP’s compliance with the
corresponding conditions for recognition of Tier 2 TC-CCP. It is the incremental effort of
this additional assessment the one that would require greater supervisory cost in terms
of FTEs, use of horizontal services and IT systems. Therefore, while in general terms the
feedback to the proposed Tier 2 TC-CCP fees was not positive, ESMA understands that
the main reason for this was the misperception by the respondents that the cost of
recognition of Tier 1 and Tier 2 TC-CCPs is the same. By no means ESMA would have
pre-judged the levels of fees applicable to each entity.
46. With regards to the level of fees for Tier 1 TC-CCPs, a split feedback was received. The
main supporters for lower or zero fees advocated that the proposed amounts are higher
than those of other authorities. Furthermore, these respondents indicated that
establishing fees would create barriers to entry for smaller TC-CCPs and might have an
impact on the liquidity. While theoretically this reasoning might be correct, it should also
be noted that in principle creating a registration framework also establishes a barrier to
entry, same as the existence of certain recognition requirements, such as equivalence
decisions.
47. Therefore, after having analysed the arguments provided as part of the feedback
received and the FTEs expected to be dedicated to assessing an application for
recognition and without taking comparable compliance into account, ESMA proposes the
following fees:
a. Any TC-CCP applicant - one-off fee of 50,000 EUR covering the tiering and reduced
costs of assessing an application for recognition of Tier 1 TC-CCP.
a. Additional fees of 300, 000 EUR for TC-CCP that are deemed to be Tier 2. This fee
will cover the costs of tiering and additional information to be assessed prior to the
initial recognition is granted.
48. In the case of TC-CCPs whose application is suspended, they will not be subject to fees
during the suspension. Once their application is not considered as suspended, they will
become subject to the fees detailed in this section. The reason for this is that these
entities would need to cover the costs for their assessment under EMIR 2.2.
49. Following the performance of the periodic tiering review of the TC-CCPs, it may be that
a Tier 1 TC-CCP becomes a Tier 2 TC-CCP. In that case, ESMA proposed that the new
Tier 2 TC-CCP would need to follow the process to be recognised as a Tier 2 TC-CCP.
This would also mean an increased supervisory assessment and greater administrative
effort towards that entity. To cater for these extra costs, the entity that becomes a Tier 2
TC-CCP will have to pay the difference between the Tier 2 TC-CCP fee and the Tier 1
TC-CCP fee. The feedback to this proposal was positive in general and supported an
increase in the level of fees when an entity increases its systemic relevance in the EU.
Some more technical aspects relating to the calculation of pro-rata extra fees were
proposed. ESMA acknowledges this aspect, but in order to simplify the process of
determination of fees, ESMA would suggest to not include any additional factoring in the
fee calculation.
20
50. In the case, when a Tier 2 TC-CCP becomes Tier 1 TC-CCP, ESMA will not be
reimbursing or giving back the one-off initial fee difference to that entity, as there has
already been an increased supervisory and administrative effort towards that entity when
it was determined to be Tier 2 TC-CCP. Instead, the Tier 1 TC-CCP fee will be applicable
to that entity for the following year.
51. Finally, a Tier 2 TC-CCP may request the application of comparable compliance. This
would require the existence of an EC delegated act declaring comparable compliance,
which is further detailed under Section 6.4 of this final report.
ESMA proposes the following fees for initial recognition under EMIR 2.2. or for change
of tier following review:
A. One-off fee of one-off fee of 50,000 EUR covering the tiering and reduced costs of
assessing an application for recognition of Tier 1 TC-CCPs including cost of MoUs
update and equivalence assessment, as applicable;
B. Additional fee of 300,000 EUR for T-CCPs that are deemed Tier 2 related to initial
tiering, assessment of compliance with EMIR and recognition of TC-CCPs, including
cost of MoUs update and equivalence assessment, if needed. This additional fee will be
reduced to 150,000 EUR, in case the TC-CCP requests application of comparable
compliance before it is recognised.
When a Tier 1 TC-CCP becomes Tier 2 TC-CCP, it should pay the difference between
the two fees, as indicated in section 6.8.
ESMA proposes that each TC-CCPs whose application for recognition is suspended
does not pay any fee during the suspension of the application.
6.2 Fees in 2019 for recognised or applicant TC-CCPs
52. It is expected that EMIR 2.2. will enter into force in Q4 2019. In the CP ESMA indicated
that in order to cover the costs related to TC-CCPs, ESMA will charge in 2019 all TC-
CCPs that are already recognised with a fee that will be proportionate to the Tier 1 TC-
CCP annual fee weighted by the proportion of days in 2019 for which EMIR 2.2. is in
force. All but one respondent referred to the entry into force of the delegated act on tiering
as the starting point for charging fees to TC-CCPs. In addition, it was mentioned that
most of the entities have already decided their budget for 2019 in 2018, hence any
unforeseen charge would impact their financial planning.
53. In this respect it is worth mentioning that Article 25d(1)(b) EMIR, as amended by EMIR
2.2. provides that ESMA shall charge fees to TC-CCPs annual fees associated with
ESMA's tasks in accordance with this Regulation in relation to the CCPs recognised in
accordance with Article 25. Moreover, until the amendment of EMIR by EMIR 2.2., ESMA
has been supervising TC-CCPs without charging them fees and financing this activity
with its general budget, i.e. not performing other activities related to the supervision of
21
financial stability, and orderly markets in eh EU. Moreover, these changes were known
since the proposal was tabled (2017), so the risk of being charged fees could have been
reflected in the TC-CCPs budgets. The triggering point for the legislation to take effect is
its entry into force. The tiering delegated act is irrelevant for this proposal as all
recognised CCPs will be charged as non-tiered, which is equivalent to the pro rata of a
tier 1 fees, i.e. the minimum fee the TC-CCPs can be requested to pay. Following the
tiering delegated act what it would change is that some CCPs might be considered Tier
2 and pay higher fees. Finally, the expected amounts to be paid by the TC-CCPs for
2019 are not substantial as to even remotely impact the budgets of the TC-CCPs. As a
result, ESMA reiterates its technical advice to charge pro-rata fees in 2019.
ESMA proposes that each TC-CCP that is recognised at the time of entry into force of
EMIR 2.2. pays the Tier 1 TC-CCP annual fee factored by the proportion of days for which
EMIR 2.2. is in force in 2019.
6.3 Fees in 2020 and until end of transition period for recognised or
applicant TC-CCPs in 2020
54. ESMA mentioned in the CP that operationally-wise tiering could only be performed
following the entry into force of the delegated acts on tiering and comparable compliance
adopted by EC under the last paragraphs of Article 25(2a) and of Article 25a of EMIR as
amended by EMIR 2.2. This is expected to take place in early 2020. In case the entry
into force is delayed, ESMA proposed to keep the same approach as for 2019.
55. Therefore, ESMA proposed that for 2020 all TC-CCPs pay at least the annual fee
applicable for Tier 1 TC-CCPs. This fee will include also the costs of performing the
tiering. Once tiering is conducted it might result in a TC-CCP becoming Tier 2 TC-CCP.
56. The entities that are determined to be Tier 2 would need to be recognised as Tier 2 TC-
CCPs following the steps indicated in paragraph 45 in the section for initial recognition.
ESMA further proposed that The Tier 2 TC-CCP should then pay the difference between
the Tier 1 TC-CCP one-off fee and the Tier 2 TC-CCP one-off fee, i.e. 300,000 EUR. In
this way it will be ensured that there is a level playing field between new applicants that
are determined Tier 2 and the already recognised TC-CCPs that following the
performance of the tiering process are determined to be Tier 2 TC-CCPs.
57. The feedback on this point was similar to the one on the 2019 fees, i.e. fees should take
as reference point the adoption of the delegated act on tiering and there should be a pro-
rata payment for the days of supervision as Tier 2. ESMA reiterates a consistent
approach to the one proposed in the previous sections, as it will increase predictability
of fees and cover ESMA’s costs. Therefore, before the delegated act on tiering all TC-
CCPs are considered as non-tier 2 CCPs and pay the fee accordingly, i.e. the fee
envisaged for Tier 1, which is the minimum fee included in the technical advice.
22
ESMA proposes that each TC-CCP that is recognised at the time of entry into force of
EMIR 2.2. and where the review under Article 89(3c) has not yet been finalised, pays as
annual fee 50,000 EUR.
ESMA proposes that in case an already recognised TC-CCP is determined, following the
performance of the tiering process, to be a Tier 2 TC-CCP, that TC-CCP should pay in
addition 300,000 EUR. This additional fee will be reduced to 150,000 EUR, in case the
TC-CCP requests application of comparable compliance before it is recognised.
ESMA proposes that in case an already recognised TC-CCP is determined, following the
performance of the tiering process, not to be a Tier 2 TC-CCP, that TC-CCP should not
pay any additional fee to the 50,000 EUR that it has already paid.
6.4 Comparable compliance
58. Article 25a of EMIR as amended by EMIR 2.2 envisages the possibility for a Tier 2 TC-
CCP to request that ESMA assesses its comparable compliance with the requirements
under EMIR, i.e. the extent to which the CCP’s compliance with Article 16, Title IV and
Title V of EMIR is satisfied by the CCP’s compliance with the comparable requirements
applicable in the third country. The new Article 25a(3) of EMIR mandates the EC to adopt
a delegated act to specify: (a) the minimum elements to be assessed for the purposes
of paragraph 1 of Article 25a; (b) the modalities and conditions to carry out the
assessment. In accordance with Article 82(3) of EMIR, the EC shall endeavour to consult
ESMA before adopting such a delegated act.
59. Therefore, as explained in the CP, when a Tier 2 CCP submits a reasoned request that
ESMA assesses comparable compliance with the relevant home rules that apply to that
TC-CCP, ESMA will need to carry out a detailed assessment of the provisions for which
comparable compliance is applicable. This detailed assessment will result in increased
initial costs, which is the result of the additional activities to be performed vis-à-vis the
Tier 2 TC-CCP. However, following the completion of the assessment, the resulting on-
going supervisory and administrative effort towards that Tier 2 TC-CCP will be reduced,
as it is expected that there will be a greater level of reliance on the compliance with EMIR
through the compliance with comparable rules applying to that TC-CCP. This being said,
it is worth mentioning that ESMA will still incur important costs, as the application of
comparable compliance requires a much more complex compliance assessment,
because the EMIR requirements would need to be complied with indirectly, it will also
need to take into account the assessments made by the home regulator and it will require
adaptations to consider the specificities of the third country regulatory and supervisory
framework as well as the specificities of individual products. On balance, however, this
will ultimately reduce the annual fees charged to the relevant Tier 2 TC-CCPs, because
ESMA will be able to rely on assessments and supervisory activity conducted by the
home authority.
23
60. ESMA also indicated in the CP that it does not expect that all entities would have the
same level of comparable compliance. However, ESMA is also mindful that high
granularity of the fees and respective discounts relating to the application of comparable
compliance would increase the financial management costs unnecessarily, with limited
tangible benefit for the entities and ESMA. Nevertheless, with regards to the discounts
applicable in case comparable compliance is granted, two options were considered in
the CP.
61. Therefore, given the ESMA budget procedure, this will result in (i) balancing the fees
paid by the other Tier 2 TC-CCPs which do not have comparable compliance and (ii)
lowering the total number of FTEs needed, thus lowering the total cost of TC-CCP
activities.
62. For the avoidance of doubt, if the application of comparable compliance for a given Tier
2 TC-CCP is removed, then the discount will not be applicable. The payment and
reimbursement of the one-off fee are detailed below.
63. Option A proposed by ESMA establishes a single additional fee of 250,000 EUR for the
assessment of the applicability of comparable compliance and a 20% discount from the
annual fees for the entities for which comparable compliance is applicable.
64. Option B alternatively establishes a single additional fee of 250,000 EUR for the
assessment of the applicability of comparable compliance and two levels of discount
(15% and 35% respectively), depending on whether the Tier 2 TC-CCP has a low or high
degree of comparable compliance.
65. The reason for having a single one-off fee for requesting comparable compliance is that
at the time of the request most likely it will not be known if the resulting comparable
compliance will be high or low. None of the respondents challenged this proposal.
66. The benefits of Option A are that it (i) simplifies the determination of comparable
compliance from a fee management perspective, (ii) eliminates any potential conflicts of
interest with regards to the determination of high or low level of comparable compliance
by the applicant Tier 2 TC-CCP or by ESMA and (iii) ensures increased upfront
predictability of fees for applicant Tier 2 TC-CCPs. The drawback of this approach is that
it applies the same discount to entities which might have very different levels of
comparable compliance.
67. The benefits of the alternative Option B compared with Option A are that it more
accurately represents the different level of applicability of comparable compliance and
thus related costs. The drawbacks of Option B compared with Option A that were
indicated in the consultation paper however are that it (i) makes more complex the
determination of comparable compliance from a fee management perspective, (ii) might
potentially create conflict of interest for the applicant Tier 2 TC-CCP or ESMA with
regards to the determination of low or high comparable compliance and (iii) reduces
upfront predictability of fees for applicant Tier 2 TC-CCPs.
68. However Only one respondent supported Option A. The rest were in favour of a more
proportionate approach that takes into account the level of comparable compliance.
Therefore, ESMA will include in its technical advice the proposal to establish two levels
24
of comparable compliance discounts. To mitigate the conflict of interest that was
identified for that option, ESMA proposes in this advice to establish quantitative
thresholds for the determination of low or high comparable compliance. The application
of a low comparable compliance discount will take place when for a given Tier 2 TC-CCP
there is comparable compliance for up to 50% of the EMIR provisions, as amended by
EMIR 2.2. Otherwise, the high comparable compliance discount should apply.
ESMA proposes that the following framework for comparable compliance fees under
EMIR 2.2.:
A. One-off fee of 250,000 EUR for each entity requesting comparable compliance in
addition to the one-off initial recognition fee;
B. Two levels of discount compared with the amount due by entities without comparable
compliance
i. 15% discount for the annual fee for entities with low comparable compliance, that
is, entities for which up to 50% of the EMIR provisions are fulfilled;
ii. 35% discount for the annual fee for entities with high comparable compliance,
that is, entities for which more than 50% of the EMIR provisions are fulfilled.
If the application of comparable compliance for a given Tier 2 TC-CCP is removed, then
the discount will not be applicable.
6.5 First-year fee following initial recognition
69. As ESMA indicated in the CP, it is very unusual that a recognition decision would take
place on the last day of a calendar year and it will enter into force on the first day of the
subsequent calendar year. Normally, administrative decisions take place during the
calendar year. This requires that the costs until the end of a given year are covered by
fees which are not the recognition fees.
70. Under EMIR and SFTR, ESMA indicated that the supervisory activities in the first year
after registration are linked to the registration process and included a formula for
calculating the first-year fee as a percentage of the registration fee which is similar to the
initial recognition fee in this CP.
71. ESMA therefore proposed that the percentage should be related to the period of time
during which the TC-CCP is supervised in its first year of operations under the EMIR 2.2.
framework. This period should, of course, be linked to the period required to recognise
a TC-CCP. EMIR establishes 30 working days for assessment of completeness and 180
working days for granting recognition. ESMA understands that this is the most
proportionate approach and the one ensuring greater alignment with other types of fees
already charged by ESMA and thus proposed calculation according to the below
TC-CCP first-year fee = Min (Recognition fee, Recognition fee * Coefficient)
25
Coefficient = 𝑆𝑢𝑝𝑒𝑟𝑣𝑖𝑠𝑜𝑟𝑦 𝑤𝑜𝑟𝑘𝑖𝑛𝑔 𝑑𝑎𝑦𝑠 𝑇𝐶−𝐶𝐶𝑃𝑖
210 𝑤𝑜𝑟𝑘𝑖𝑛𝑔 𝑑𝑎𝑦𝑠
72. The respondents generally agreed with this proposal and mentioned as its main benefits
the use of the pro-rata base and the proportionality with the registration fees. As a result,
ESMA will confirm it in the final advice.
ESMA proposes the following first-year recognition fees:
TC-CCP first-year fee = Min (Recognition fee, Recognition fee * Coefficient)
Coefficient = 𝑆𝑢𝑝𝑒𝑟𝑣𝑖𝑠𝑜𝑟𝑦 𝑤𝑜𝑟𝑘𝑖𝑛𝑔 𝑑𝑎𝑦𝑠 𝑇𝐶−𝐶𝐶𝑃𝑖
210 𝑤𝑜𝑟𝑘𝑖𝑛𝑔 𝑑𝑎𝑦𝑠
6.6 Annual fees
6.6.1 Introduction
73. As indicated in section 3, ESMA’s budget is defined prior to the beginning of a given
calendar year, and all fee revenues are considered as general revenue.
74. In the CP, ESMA already indicated that it is assigned with several recurrent tasks under
EMIR 2.2. and establishing a separate fee for each activity will overcomplicate the fee
schedule for the supervised entities, thus run contrary to the principles included in section
3. In addition, it could create a misperception of potential conflict of interest to perform
those activities that require higher fees. Therefore, consistently with other annual fees
already charged by ESMA, such as those to TRs and CRAs, ESMA is proposing to
establish fees that are not linked to specific tasks, but rather cover all activities related
to TC-CCPs.
75. Tasks related to Tier 1 TC-CCPs will be established in a way to perform the relevant
assessment of compliance, and it will cover all the fixed costs – periodic review, requests
for information, on-going monitoring and, investigations. The activities vis-à-vis Tier 2
TC-CCPs will cover much more tasks, including all those relevant for Tier 1 TC-CCPs.
In that regard, the annual fee for Tier 1 TC-CCPs could be seen as a sort of a minimum
fee already in place for TRs and CRAs under the ESMA fee regulations. ESMA
understands that the predictability of the annual fees for TC-CCP to is relatively high,
having regard to (i) the fact that the universe of entities that might be subject to EMIR
2.2. is known and to the (ii) budgeting approach indicated in section 3.
76. Two respondents supported the approach, while four of the rest focused their feedback
mainly on the actual levels of fees, on the process for determining Tier 1 and Tier 2 TC-
CCPs and not on the approach. The issue with conflict of interest and charging fees to
TC entities is already covered in section 2.
77. Another more general topic that was mentioned was on the comparable compliance and
how the assigned level of comparable compliance will influence the level of fees charged
and the ESMA’s costs. The technical aspects are included in section 6.4, but it is worth
26
clarifying that in case where some or all the entities have comparable compliance fee
reduction, then ESMA will subsequently align its supervisory costs.
78. Under Article 25d(2) the fees charged to TC-CCPs shall be proportionate to their
turnover. In the case of TC-CCPs, the proportionality of fees with the turnover cannot be
assessed in isolation. It has necessarily to be considered in conjunction with the
relevance of a given TC-CCP in the EU. The relevance of a TC-CCP for the EU is linked,
among others, to the revenues that are obtained providing services in the EU or to EU
clearing members. Moreover, ESMA proposes to establish separate annual supervisory
fee for Tier 1 TC-CCPs and Tier 2 TC-CCPs. By establishing separate fees for Tier 1
TC-CCPs and Tier 2 TC-CCPs, which leverage on the relevance that a TC-CCP has in
the Union, ESMA also understands that its advice complies with the requirement in
Article 25 to apply fees that are proportionate to the turnover of the TC-CCPs.
79. The specific more technical aspects of this proposal are described in sections 6.6.2 and
6.6.3.
6.6.2 Annual fees for Tier 1 TC CCPs
80. The fees for Tier 1 TC-CCPs cover the activities vis-à-vis Tier 1 TC-CCPs that will be
performed by ESMA.
81. These include, as mentioned earlier, all the fixed costs – tiering review, requests for
information, on-going monitoring and investigations.
82. Therefore, in the CP ESMA indicated that the fees for Tier 1 TC-CCPs could be
considered as a minimum fee which is already in place for other supervised entities such
as TRs and CRAs. Having regard to ESMA’s cost estimates referred to in section 4 and
given the tasks required under EMIR 2.2. ESMA proposed in the CP to establish this fee
at the level of 50,000 EUR.
83. The feedback was split, with some respondents considering that 50,000 EUR is an
appropriate amount, while others opposing it. One said that “to continue to facilitate
access to smaller markets by EU clearing members and local subsidiaries of EU banking
groups, ESMA should consider establishing specific criteria for the assessment of the
relative importance of each TC-CCP, below which ESMA will not charge, or would
significantly reduce, the annual fees for TC-CCPs”. As explained in this and in previous
sections, ESMA performs tasks under EMIR 2.2. and there is a legal mandate to cover
the supervisory costs with fees, hence those cannot be removed. Furthermore, to the
extent possible, cross-subsidies between activities should be avoided. Thus, for reasons
of access to particular markets, ESMA should not charge its costs to other CCPs or to
ESMA’s general budget. Fees need to be on a cost recovery basis and the cost
associated with Tier 1 CCPs do not depend on the business opportunities of EU clearing
members on those markets. Moreover, the level of fees and its determination are clearly
indicated in section 4.
84. Another one indicated that the level of proposed fees is not aligned with the ones charged
by other TC authorities to the recognised TC-CCPs. This aspect is also covered in detail
in section 2.
27
85. ESMA therefore reiterates its proposed level of fees to Tier 1 TC-CCPs.
ESMA proposes that each Tier 1 TC-CCPs pays an annual fee of 50,000 EUR.
6.6.3 Annual fees for Tier 2 TC-CCPs
86. In the CP, ESMA explained that the annual budget definition process under EMIR 2.2.
will follow the same steps as the budget for any other revenue from supervised entities
received by ESMA:
a. Determination of budget, i.e. the number of FTEs working directly or indirectly on Tier
2 TC-CCPs.
b. Attribution of the relevant fixed and minimum fee amounts to the relevant supervised
entities
c. Allocation of the resulting portion of fees to the relevant group of supervised entities
87. Further, ESMA indicated that differently from other industries supervised by ESMA,
CCPs have already an extensive track record and the business models, while evolving,
are based on similar pillars. The potential disruption of new suppliers of clearing services
is neither considered an issue, as any potentially successful commercial offering will be
assessed in the tiering processes required under EMIR 2.2.
88. Moreover, once a TC-CCP is deemed as systemically important, the supervisory and
administrative effort will be very similar, although not identical, across all Tier 2 TC-
CCPs. ESMA therefore proposed a flat annual fee for all Tier 2 TC-CCPs. The rationale
for this was the following:
a. It increases the predictability of fees,
b. it reduces the complexity in fees calculation in terms of business year, exchange
rates, attributable portion of revenues, etc.
c. it streamlines the fee management
d. it accounts for the proportionality between Tier 1 and Tier 2 TC CCPs
e. it leverages on the tiering process
89. Most of the respondents supported the ESMA’s approach to have a flat annual fee for
Tier 2 TC-CCPs, as the profitability of a CCP is not itself directly linked to the supervisory
costs. Moreover, it was mentioned that such an approach could disincentivise TC-CCPs
from improving their product range and risk management practices if they consider that
those enhancements come at an additional ESMA supervisory cost.
90. One respondent also indicated that in the case of comparable compliance, the fees for
Tier 2 TC-CCPs should be as the ones for Tier 1. This aspect is discussed in section 6.4.
91. Two respondents linked the proportionality with the fees charged by the home authority
and the supervisory effort by ESMA and also requested also a linkage with the fees
charged by other host authorities. One of them also considered that in case the fees took
28
into account the revenues, it should be all the revenues generated by the CCPs, not only
the ones linked to the EU. ESMA however understands that this will deviate from the
objectives of EMIR 2.2. and will introduce an element of incomparability between the TC-
CCPs as they have global business models under which some business lines could have
little or no impact over the EU.
92. As indicated previously in section 2, ESMA considers impractical to link the fees to the
ones charged by home supervisor or to the ones charged by other host supervisors given
that that neither the regulatory and supervisory framework of those jurisdictions, nor the
costing model of the supervisory agencies, or the relevant marketplace are the same as
the EU. Indeed, the fees will be proportionate to the supervisory effort towards the Tier
2 TC-CCPs.
93. Given the support to the ESMA’s proposals and the unavailability of alternatives
suggested by respondents, ESMA retains the approach.
ESMA proposes that each Tier 2 TC-CCPs pays an equal annual fee. The annual fee is
determined by allocating to each Tier 2 TC-CCP an equal share of the ESMA costs 10,
decreased by the following fees due by TC-CCPs for the same year:
a. One-off recognition fees, including the additional comparable compliance fee
b. First-year fees
c. Annual fee for Tier 1 TC-CCPs
Notwithstanding the previous paragraph, when comparable compliance is applicable, the
Tier 2 TC-CCP will receive the applicable discount.
6.7 Fees for withdrawal of TC-CCP recognition
94. Article 25m of EMIR 2.2. includes a possibility for ESMA to withdraw the recognition of a
TC-CCP. This provision resembles the one for trade repositories under EMIR while
adding the specific cases for TC-CCPs such as impossibility for ESMA to exercise
effectively its responsibilities and the suspension or withdrawal of the equivalence
decision. In addition, there is a possibility to withdraw recognition only for a particular
service, activity or class of financial instrument.
95. ESMA indicated in the CP that while under the current ESMA fee regulations, ESMA has
not envisaged any specific fee for withdrawal of registration or recognition of TRs, the
experience in implementing EMIR showed that there was a need to establish such fee,
mainly to more directly account for the supervisory costs vis-à-vis a given entity.
Otherwise the extra supervisory effort would be covered by the annual fees paid by all
the TC-CCPs. Given that the partial withdrawal of recognition would not mean that the
10 ESMA costs for the period 2021-2023 could include part of the EC advancement which was not covered by fees paid by TC-CCPs in 2019 and 2020.
29
TC-CCP will cease to service the EU, ESMA indicated that there was no need to set up
a specific fee for withdrawal of recognition for a particular service, activity or class of
financial instrument, as the TC-CCP would continue to be supervised. However, ESMA
concluded that when the recognition of the TC-CCP is withdrawn, then there was a need
to establish such a fee.
96. ESMA mentioned also that the work carried out during a full withdrawal phase is
unknown, however it is expected that it will be less than the one during recognition. For
the purposes of this consultation ESMA believes that the supervisory and administrative
effort would be proportionate to half the work undertaken to recognise the TC-CCP.
Withdrawal of recognition requires a thorough assessment and supervision of the
required wind-down of services. ESMA also proposed to not include the extra charge for
comparable compliance assessment, as when the withdrawal of recognition takes place,
there is no need to consider the conditions of comparable compliance.
97. Only one respondent supported the inclusion of withdrawal fee, however that entity
indicated that the fee should be the same for Tier1 and Tier 2 TC-CCPs, as there is no
great difference in the tasks to be performed. The rest of the respondents indicated that
such a fee did not exist at other authorities and that it would create a barrier to exit, hence
it should not be considered.
98. ESMA takes note of the feedback and will remove this fee.
99. For the avoidance of doubt, in case Article 25(2c) is applied to a Tier 2 TC-CCP, it will
still have to pay the annual supervisory fee for a Tier 2 TC-CCP until it continues to be
recognised.
If a Tier 2 TC-CCP is assessed under Article 25(2c) as not being able to provide its
services in the EU unless it is authorised under Article 14, it will still have to pay the annual
supervisory fee for a Tier 2 TC-CCP until its recognition is withdrawn.
6.8 Payment and reimbursement conditions under EMIR 2.2.
6.8.1 Fees for initial recognition and for application of comparable compliance
100. Similar to the established practice under other fee regulations, ESMA indicated in the CP
that the fees for tiering and initial recognition are due at the time of application for
recognition and should be paid by TC-CCPs upon the initiation of the recognition
process.
101. As mentioned in section 6.1, once a TC-CCP is determined to be a Tier 2 CCP, ESMA
will need to receive additional information from the Tier 2 TC-CCPs in relation to their
specific conditions for recognition.
102. In this regard, ESMA proposed that both Tier 1 and Tier 2 TC-CCPs pay the respective
initial recognition fee once the determination of whether they are Tier 1 or Tier 2 has
taken place, although the fee is due at the time of application. ESMA pointed out that
30
this will result in only one payment made by TC-CCPs and it will facilitate ESMA’s fee
management.
103. Moreover, ESMA acknowledged the fact that in case an entity is determined to be Tier 2
TC-CCP, it may decide to request the application of comparable compliance. However,
there is no certainty, neither an obligation, as to when the Tier 2 TC-CCP will do so.
Therefore, it should pay the initial recognition fee as soon as it is determined to be a Tier
2 TC-CCP and the additional fee for the comparable compliance assessment, only when
it requests this application of comparable compliance.
104. The feedback on the payment conditions for the initial recognition fee was somehow split,
with some of the respondents linking the payment of recognition fee with the successful
recognition by ESMA. While worthwhile exploring, this approach has two main
drawbacks (i) does not account timely the effort to assess an application for recognition
and (ii) creates a conflict of interest for ESMA to consider all applicants as compliant and
recognise them. Some respondents also stated that a model of pay as you go could be
established as it will “limit losses for the venture if the initial assessment reveals that the
business case would be unviable due to the costs involved.” ESMA believes that such
an approach will increase the predictability of fees, while it will still impact negatively the
fee management.
105. The feedback on the payment conditions for comparable compliance was more in the
direction of payment after a successful determination, however neither the conflict of
interest to determine the entity as subject to comparable compliance, nor the supervisory
effort from ESMA to assess it were considered by the respondents. Moreover, one of
them, while requesting simplified fee schedule in other responses indicated that there
might be smaller fees for reaching given milestones in the comparable compliance
determination or others linked to submission of specific documents. ESMA considers
that both proposals are not appropriate, as they will make the process extremely
burdensome and will impact negatively the fee management by ESMA.
106. In this regard and taking into account the proposal to simplify the payment of fees and
increase predictability, ESMA amends its proposals as follows.
Under EMIR 2.2, ESMA proposes that each TC-CCP pays the one-off recognition fee
upon filing the application for recognition.
Once the determination has taken place, the Tier 2 TC-CCPs will make the additional
payment for assessment of compliance with EMIR.
In case a Tier 2 TC-CCP decides to request application of comparable compliance,
ESMA proposes that this fee becomes payable at the time of the submission of the
request.
31
6.8.2 No reimbursement of fees in case of withdrawal of application by a TC-CCP
before ESMA’s recognition
107. In the CP ESMA proposed to not reimburse fees to a TC-CCP which decides to withdraw
its application before recognition is granted by ESMA. This is because the handling of its
application and the preparatory work related to the tiering are costs already incurred
already by ESMA. The same approach is taken with regards to fees for registration and
extension of registration under EMIR and SFTR as well as to the application part of the
recognition fee under SFTR. The main reasons supporting this proposal are the following
ones:
a. Limiting the spurious applications from companies aiming at providing clearing
services without fulfilling a minimum set of requirements;
b. Reducing ESMA’s budget burden and other TC-CCP’s costs to sustain the costs of
analysing all the application dossiers submitted and any follow-up action required
until the withdrawal; and
c. Allowing ESMA to concentrate the limited resources available on the applications
that carry a true intention of becoming a TC-CCP and to discourage the submission
of spurious applications.
108. The feedback was also split, but the respondents that opposed the reimbursement
adduced reasons such as non-transparent process or the costs incurred by the applicant
TC-CCP. In this regard ESMA reiterates that the application process is very well-defined
process, subject to the applicable administrative steps. In this respect and having in mind
the supervisory costs incurred by ESMA in assessing an application for recognition, it
will be unreasonable to support those costs with the fees paid by other TC-CCPs. The
costs incurred by the applicant will be such in any case, hence ESMA understands that
this is unrelated to the reimbursement in case of withdrawal.
109. ESMA therefore confirms its initial proposals.
ESMA proposes to not reimburse fees to a TC-CCP that decides to withdraw its
application for recognition, including before the performance of tiering.
6.8.3 Annual fees
110. To fully support its activities vis-à-vis TC-CCPs, ESMA indicated in the CP that it will
need to receive the supervisory fees ahead of the start of the calendar year and no later
than 31 December. This approach is aligned with the ESMA’s budgeting approach
outlined in section 3.
111. This means that any periodic assessment which might result in a change of tier of the
TCCCPs should be completed by the end of the Q3 of a given year in order to produce
and communicate the relevant fees for TC-CCPs.
32
112. Given the frequency of performance of ESMA’s activities, they will produce
administrative effects and potential changes in fees only from one calendar year to
another.
113. There was a general support for a single payment of fees, which are not amendable in
the course of the year. One respondent mentioned that the time period could be
extended until the end of the first quarter. Another one requested a greater predictability
of the annual fees and earlier communication to entities. ESMA agrees with this and will
aim at communicating the fees payable at the earliest opportunity.
ESMA proposes that TC-CCPs pay their relevant annual fees by 31 December of the
year preceding the one for which they are due. The fees should be calculated on the
basis of the latest available information for annual fees.
6.8.4 Withdrawal of recognition
114. Following the withdrawal of recognition of a TC-CCP, this entity will no longer be subject
to ESMA’s supervision. Therefore, in the CP ESMA proposed that the fee for withdrawal
of recognition is paid by the TC-CCP at the time at which the process included under
Article 25p is initiated. In case the withdrawal is requested by the TC-CCP, then the fee
should be paid by the TC-CCP at the point in time when it requests the withdrawal of
recognition. ESMA proposed that if the recognition is finally not withdrawn, no
reimbursement will take place.
115. The feedback was aligned with the feedback to the existence of withdrawal fee.
Therefore, in line with the ESMA proposal to remove the withdrawal of recognition fee,
ESMA will remove from the advice the payment and reimbursement conditions for such
fee.
6.8.5 2019 and 2020 TC-CCP fees
116. While it is expected that EMIR 2.2. enters into force in Q4 2019, the relevant delegated
act on fees of the EC could be adopted, pursuant to Article 82 EMIR, only at the
beginning of 2020. The payment conditions for this are covered in sections 6.2 and 6.3
where these instances are discussed.
33
7 Annex
7.1 Annex I
Commission mandate to provide technical advice
ESMA received a provisional mandate on 3 May 2019 to provide technical advice for the
development of the corresponding Delegated Act, on the basis of which ESMA ran a
consultation, and on 30 October 2019 the mandate was confirmed.
PROVISIONAL REQUEST TO THE EUROPEAN SECURITIES AND MARKETS
AUTHORITY (ESMA) FOR TECHNICAL ADVICE ON A POSSIBLE DELEGATED ACT
CONCERNING THE SUPERVISORY FEES TO BE CHARGED TO THIRD-COUNTRY
CENTRAL COUNTERPARTIES (CCPs)
With this provisional mandate, the Commission seeks ESMA's technical advice on a possible delegated
act concerning the European Market Infrastructure Regulation (EMIR11) as amended by the 2019 CCP
Supervision Regulation12 (the "Regulation as amended"). This delegated act should be adopted in
accordance with Article 290 of the Treaty on the Functioning of the European Union (TFEU).
The provisional nature of the present mandate stems from the fact that the Regulation as amended has
not yet entered into force. However, the Council (at the meeting of COREPER on 20 March 2019) and the
European Parliament (in a plenary vote on 18 April 2019) have approved the political agreement on the
text of the 2019 CCP Supervision Regulation. Currently, the 2019 CCP Supervision Regulation is subject
to legal revision and translation prior to its publication in the EU Official Journal.
The Commission reserves the right to revise and/or supplement this mandate. The technical advice
received on the basis of this mandate should not prejudge the Commission's final decision.
The mandate follows the EMIR Regulation (Article 82), the Communication from the Commission to the
European Parliament and the Council – Implementation of Article 290 of the Treaty on the Functioning of
the European Union (the "290 Communication"),13 and the Framework Agreement on Relations between
the European Parliament and the European Commission (the "Framework Agreement").14
According to Article 25(bb) of the Regulation as amended and with regard to the supervisory fees to be
charged to CCPs established in a third country, the Commission shall adopt a delegated act to specify
further the type of fees, the matters for which fees are due, the amount of the fees and the manner in
which they are to be paid.
***
11 Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories, OJ L 201, 27.7.2012, p.1. 12 http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NONSGML+TA+P8-TA-2019-0438+0+DOC+PDF+V0//EN 13 Communication of 9.12.2009. COM (2009) 673 final. 14 OJ L 304, 20.11.2010, p. 47.
34
The European Parliament and the Council shall be duly informed about this mandate.
In accordance with the Declaration 39 on Article 290 TFEU, annexed to the Final Act of the
Intergovernmental Conference which adopted the Treaty of Lisbon, signed on 13 December 2007, and in
accordance with the established practice within the European Securities Committee,15 the Commission
will continue, as appropriate, to consult experts appointed by the Member States in the preparation of
possible delegated acts in the financial services area.
In accordance with point 15 of the Framework Agreement, the Commission will provide full information
and documentation on its meetings with experts appointed by the Member States within the framework of
its work on the preparation and implementation of Union legislation, including soft law and delegated acts.
Upon request by the Parliament, the Commission may also invite Parliament's experts to attend those
meetings.
The powers of the Commission to adopt delegated acts are subject to Article 82 of the EMIR Regulation.
As soon as the Commission adopts a possible delegated act, the Commission will notify it simultaneously
to the European Parliament and the Council.
1. Context
1.1 Scope
On 13 June 2017, the Commission published its proposal to amend EMIR as regards the
procedures and authorities involved for the authorisation of CCPs and requirements for the
recognition of third-country CCPs. On 13 March 2019 the European Parliament and the Council
reached a political agreement on a compromise text, which was formally endorsed by the two
institutions respectively on 18 April 2019 and 20 March 2019. Publication in the Official
Journal is expected by Q3 2019. The text will enter into force on the twentieth day following
its publication.
The Regulation as amended will strengthen the framework for the supervision of Union and
third-country CCPs that provide clearing services to EU clearing members or trading venues.
This is to address the increasing concentration of risk in these infrastructures and the significant
proportion of financial instruments denominated in Union currencies that are cleared outside
the Union, including as a result of the expected withdrawal of the UK from the Union. The
objective of the Regulation as amended is to reinforce the overall stability of the Union’s
financial system.
The Regulation as amended will strengthen ESMA’s direct recognition and supervisory powers
over third-country CCPs. Consequently, in accordance with Article 25d of the Regulation as
amended, ESMA will charge fees to third-country CCPs and those fees shall cover all costs
incurred by ESMA for the recognition and the performance of its tasks in relation to third-
country CCPs. ESMA will charge fees based on a Regulation on fees to be adopted by the
Commission in the form of a delegated act.
This provisional mandate focuses on the technical aspects of the Regulation on fees, including
specifying further the type of fees, the matters for which fees are due, the amount of the fees
15 Commission's Decision of 6.6.2001 establishing the European Securities Committee, OJ L 191, 17.7.2001, p.45.
35
and the manner in which they are to be paid by (i) a third-country CCP that applies for
recognition; (ii) a recognised third-country CCP not classified as systemically important or
likely to become systemically important for the financial stability of the Union or one of its
Member States (‘Tier 1 CCP’); and (iii) a recognised third-country CCP classified as
systemically important or likely to become systemically important for the financial stability of
the Union or one of its Member States (‘Tier 2 CCP’). In providing its advice ESMA should
profit from the experience of relevant national authorities in setting supervisory fees for
financial institutions.
1.2 Principles that ESMA should take into account
On the working approach, ESMA is invited to take account of the following principles:
- The principle of proportionality: the technical advice should not go beyond what is
necessary to achieve the objective of the Regulation as amended. It should be simple
and avoid suggesting excessive financial, administrative or procedural burdens for third-
country CCPs.
- The technical advice should take account of the rule-of-law principle, which requires
appropriate rights of defense for persons that are subject to ESMA’s supervision. At the
same time, it should ensure a high level of investor protection, which is a guiding
principle of EU financial regulation and requires a strong supervisor with the power to
carry out supervision and ensuring compliance with the EMIR Regulation in an effective
and efficient way.
- While preparing its advice, ESMA should seek coherence within the regulatory
framework of the Union.
- In accordance with the Regulation of the European Parliament and the Council
establishing a European Securities and Markets Authority (the "ESMA Regulation")16,
ESMA should not feel confined in its reflection to elements that it considers should be
addressed by the delegated acts but, if it finds it appropriate, it may indicate guidelines
and recommendations that it believes should accompany the delegated acts to better
ensure their effectiveness.
- ESMA will determine its own working methods depending on the content of the
provisions being dealt with. Nevertheless, horizontal questions should be dealt with in
such a way as to ensure coherence between different standards of work being carried
out by the various expert groups.
- In accordance with the ESMA Regulation, ESMA should, where relevant, involve the
European Banking Authority and the European Insurance and Occupational Pensions
16 Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010
establishing a European Supervisory Authority (European Securities and Markets Authority), OJ L 331,
15.12.2010, p. 84.
36
Authority in order to ensure cross-sectoral consistency. It should also, where relevant,
cooperate with the European Systemic Risk Board on any issues related to systemic risk.
- In accordance with the ESMA Regulation, ESMA is invited to widely consult market
participants in an open and transparent manner, and take into account the resulting
opinions in its advice. ESMA should provide a detailed feedback statement on the
consultation, specifying when consultations took place, how many responses were
received and from whom, as well as the main arguments for and against the issues
raised. This feedback statement should be annexed to its technical advice. The technical
advice should justify ESMA’s choices vis-à-vis the main arguments raised during the
consultation.
- ESMA is invited to justify its advice by providing a quantitative and qualitative cost-
benefit analysis of all the options considered and proposed. ESMA should provide the
Commission with a description of the problem, the objectives of the technical advice,
possible options for consideration and a comparison of the main arguments for and
against the considered options. The cost-benefit analysis should justify ESMA’s choices
vis-à-vis the main considered options.
- ESMA’s technical advice should not take the form of a legal text. However, ESMA
should provide the Commission with a clear and structured ("articulated") text,
accompanied by sufficient and detailed explanations. Furthermore, the technical advice
should be presented in an easily understandable language respecting current
terminology in the Union.
- ESMA should provide comprehensive technical analysis on the subject matters
described in section 3 below, where these are covered by the delegated powers included
in:
o the relevant provision of the Regulation as amended;
o the corresponding recitals, or;
o the relevant Commission's request included in this mandate.
- ESMA should address to the Commission any question to clarify the text of the
Regulation as amended that ESMA considers of relevance to the preparation of its
technical advice.
2 Procedure
The Commission is requesting ESMA’s technical advice in view of the preparation of a
delegated act to be adopted pursuant to the Regulation as amended and in particular regarding
the questions referred to in section 3 of this mandate.
The mandate takes into account the EMIR Regulation (Article 82), the ESMA Regulation, the
290 Communication and the Framework Agreement.
37
The Commission reserves the right to revise and/or supplement this mandate. The technical
advice received on the basis of this mandate will not prejudge the Commission's final decision.
In accordance with established practice, the Commission may continue to consult experts
appointed by the Member States in the preparation of delegated acts relating to the Regulation
as amended.
The Commission has duly informed the European Parliament and the Council about this
mandate. As soon as the Commission adopts the delegated act, it will notify it simultaneously
to the European Parliament and the Council.
3 ESMA is invited to provide technical advice on the following issues
The Regulation as amended requires the Commission to adopt a delegated act on fees specifying
further the type of fees, the matters for which fees are due, the amount of the fees and the
manner in which they are to be paid by (i) a third-country CCP that applies for recognition; (ii)
a recognised third-country CCP not classified as systemically important or likely to become
systemically important for the financial stability of the Union or one of its Member States (‘Tier
1 CCP’); and (iii) a recognised third-country CCP classified as systemically important or likely
to become systemically important for the financial stability of the Union or one of its Member
States (‘Tier 2 CCP’). The Regulation further specifies that the fees collected from third-country
CCPs shall cover all costs incurred by ESMA for the recognition and the performance of its
tasks in relation to third-country CCPs. The fees charged to CCPs established in a third country
shall be proportionate to the turnover of the CCPs concerned.
ESMA is invited to provide technical advice to assist the Commission in formulating a
delegated act on fees for third-country CCPs, and more specifically on the following aspects:
- ESMA is invited to reflect on the type of fees that could be levied. The Regulation provides
for (i) fees associated with applications for recognition and (ii) annual fees associated with
ESMA’s tasks in relation to recognised third-country CCPs. Fees associated with applications
for recognition could be levied on a one-off basis, while annual fees would cover all supervisory
activities for a year.
- Regarding fees associated with applications for recognition, ESMA should draw up a list of
fees related to the recognition process with the corresponding amounts in order to reflect the
two-tier classification system (Tier 1 and Tier 2 CCPs). ESMA is also invited to advise on
whether the fees’ structure should take into account the non-recognition of a third-country CCP.
- Regarding annual fees associated with ESMA’s tasks in relation to recognised third-country
CCPs, ESMA should indicate how the annual fees should be calculated, i.e. how its expenditure
necessary for the performance of its tasks in relation to third-country CCPs should be
distributed to the individual supervised CCPs, taking into account their classification as Tier 1
or Tier 2 CCPs. ESMA is invited to advise on whether fees should be yearly adjustable or fixed.
- ESMA is invited to reflect on the matters for which the fees are due. Beyond fees associated
with applications for recognition, ESMA could specify what type of supervisory activities
would be associated with the performance of ESMA’s tasks under the Regulation as amended
38
for Tier 1 and Tier 2 CCPs (e.g. ongoing supervisory activities, review of recognition decisions,
assessment of comparable compliance, on-site inspections, stress tests).
- According to Article 25d of the Regulation as amended, the amount of fee charged to a third-
country CCP shall cover all costs incurred by ESMA for recognition and the performance of its
tasks in accordance with the Regulation as amended. ESMA is invited to detail its assessment
of the costs it will incur for the recognition and supervision activities of third-country CCPs,
and provide information on its estimates and methods of calculations. ESMA should indicate
how the costs in the recognition and supervision of third-country CCPs may differ depending
on their classification as Tier 1 or Tier 2 CCPs. ESMA should also advise on how the
surpluses/deficits in ESMA supervision budget for third-country CCPs should be managed.
- According to Article 25d of the Regulation as amended, the amount of fee charged to a third-
country CCP shall be proportionate to the turnover of the CCP concerned. ESMA is invited to
provide its technical advice on appropriate method for considering the turnover of the CCP in
fee calculations.
- According to Article 25d of the Regulation as amended, ESMA’s costs incurred by the
recognition and the performance of its tasks in relation to third-country CCPs shall be covered
by fees levied from third-country CCPs. This will apply when the delegated act on fees for
CCPs is adopted and enters into force, from 2021 at the latest as laid down in the legislative
financial statement accompanying the 2019 CCP Supervision Regulation. Prior to this, an
advance of the EU budget is required to cover ESMA’s costs incurred to ensure that ESMA
has the necessary resources available to perform the tasks required under the Regulation as
amended in relation to third-country CCPs. The costs for third-country CCP recognition and
supervision should therefore be claimed back from third-country CCPs on the basis of the
Regulation on fees. ESMA should suggest modalities for the recovery of these costs from third-
country CCPs.
- ESMA should suggest the timing and appropriate modalities of the payment of the fees by (i)
applicant third-country CCPs, (ii) recognised CCPs classified as Tier 1 CCPs, and (iii)
recognised CCPs classified as Tier 2 CCPs. ESMA is invited to advise on appropriate schedules
for collection of fees (one single payment vs several payments). It has to be ensured that ESMA
always disposes of the necessary resources to finance its activities related to third-country
CCPs. This could for instance be achieved by requiring the supervised third-country CCPs to
pay the expected fees upfront, drawing up an account at the end of the year. ESMA may also
reflect on possible penalties in case of late payment, while ensuring that such penalties are
proportionate to the amount due.
4. Indicative timetable
This mandate takes into consideration that ESMA requires sufficient time to prepare its
technical advice and that the Commission needs to adopt the delegated acts according to Article
39
290 of the TFEU. The powers of the Commission to adopt delegated acts are subject to Article
82 of the EMIR Regulation that allows the European Parliament and the Council to object to a
delegated act within a period of 3 months, extendible by 3 further months. The delegated act
will only enter into force if neither European Parliament nor the Council has objected on expiry
of that period or if both institutions have informed the Commission of their intention not to
raise objections.
As laid down in the legislative financial statement accompanying the 2019 CCP Supervision
Regulation, the delegated act on fees will need to enter into force by 2021 at the latest in order
for ESMA to be able charge fees to third-country CCPs and for the advance to the EU budget
to be repaid by 2023. Therefore it is of outmost importance to start working on this issue as
soon as possible.
The deadline set to ESMA to deliver the technical advice is Q3 2019.